Zombie Economics

I was just reminded of the Macro Flame War again, and I realized that one thing both sides agree on is that the other is setting economics back by decades through their ignorance and the resurrection of old fallacies.

But this very fact seems to favor one of the sides in the debate. It reminds me of one of my favorite economics jokes:

A Keynesian encounters a Real Business Cycle theorist and says, “you idiots have set the field back twenty years !”, to which the RBC theorist replies “so you DO believe in negative productivity shocks!”

Don’t hurt yourself laughing now. Anyhow, what does it remind you of that each side here is saying, “I thought we had dispatched these old fallacies, but here they are again moving about in broad daylight and going for people’s brains”? Zombies of course! We are dealing with at least one set of idea-zombies, or zombie-ideas.

But given the current economic environment, we can see that the zombie invasion is spreading. After the bailouts, there are zombie banks too! You must be on the lookout to protect your money and your delicious brains.